Abstract:
The wealthy elite and criminals have traditionally been the primary users of tax havens, which has caused widespread alarm. As a result of the 2008 financial crisis, tax havens came into the spotlight and are now an unexpectedly important component of the world economy. This research looks at the question of whether or not the use of tax havens is significantly affected by global tax evasion. Fiscal policy, political economics, and a few other intriguing dichotomies and paradoxes are used to examine the subject. There has been no letup in the discussion about global tax evasion and its many impacts. Lack of openness in nations with greater levels of secrecy is becoming more noticeable as the global economy becomes more mobilized. We consider trade-and financial global tax evasion, a number of important control factors, and the relationship between tax haven activity and FDI. Our panel data study shows that tax haven activity is positively impacted by global tax evasion. But our data also shows that FDI has been falling since 2015, which may signal a paradigm change is on the horizon. This research lays out the pros and cons of tax havens, how they've changed due to global tax evasion, and how we might predict their future trajectory in light of this uncertainty.
